For years, Cincinnati Reds radio broadcasts were done by Marty Brennaman, a stylish, articulate radio voice, along with Joe Nuxhall, a beloved Reds legend who started pitching for the Reds when he was 15! Joe fractured syntax, went off on tangents, but his colorful stories were a great complement to Marty. At the end of every Reds radio broadcast, Joe would sign off by saying, “this is the ol’ lefthander, rounding third and heading for home….”

I’ve had a long, fairly successful run at being an industrial real estate broker in Cincinnati, and at an age I’d never have ever suspected, I’m still fully engaged and doing well. Our market is so healthy, I can pick and choose projects I want to work on, and the people I like. And in a stark contrast to the days of paying for multiple educations and scrambling for deals, I’m in a position where work is optional and financial obligations pretty much gone. It’s a fine place to be.

One of the things I like to do – have always liked to do, but now there’s more time to do it – is work with younger people who are newer in the business. Some are women, some are minorities. It’s an industry that cries for more diversity, and the major organizations representing us – NAIOP, SIOR, CCIM, ULI, etc. – are really making an effort to widen the tent.

But it’s almost as true today as it was when I started 32 years ago – when you walk in a room to talk about an assignment, those at the table are almost entirely white men.

So in this mentoring role, which to me is just giving forward (I had some really great teaching and solid support when I started), I find myself starting at fundamentals.

Examples would be,

“If you have an easy time getting ahold of someone, just remember, the next person does, too” – or “

If you try and try to reach someone, don’t give up, but when you finally reach that person, you’d better have something to say, or it will be the last time," or –

“Don’t just text or e-mail. Do you think your font looks better than the next person’s? Go meet with the client. If you don’t believe in your ability to show your worth in person, you’re in the wrong business!”

I always start with the example of me walking into a room full of people. I almost always have felt comfortable doing that and am confident that in a minute or two, I’ll have their attention. But it’s not the same for everyone.

How I usually handle that is by using a ladder example – that a project has you start on the first rung, and you have to earn your way to it. I’d get there immediately after entering that room – I caution the people I mentor that they’ll have to get accepted by a collection of unknowns in the first-impression world we live in, so concentrate on that first. If you know your stuff, or if you are comfortable with a little harmless banter, you’ll probably overcome most initial discomfort, assuming most people are reasonable. So there’s an extra half-step for you as you start.

When you’re active, and constantly on the move, sometimes you can miss the obvious. My epiphany was several years back when my company (then Cassidy-Turley, now Cushman & Wakefield) was reinventing itself, and, at first I felt great, that I was an insider fully involved with the change. Then a month later, it occurred to me – there had been a seismic shift to some younger leadership and new “fencing” around the decision process, and that I was feeling “aged out”. Nothing drastic – but it was there.

I recalled a few years earlier at an SIOR conference when an older industrial broker who I really respected hosted a breakout session that was titled something like “What Older Brokers Should Do." I was curious enough, and was getting older myself, so I said “Why not!”

I was shocked. The message being delivered was about as far from anything I’d ever do as I could imagine. The presenter, as I indicated, was well-respected, but he was advocating coloring your hair, styling it like younger guys, buying younger clothes, wearing makeup, and – this one I couldn’t believe – he said he was considering a face lift! The overarching problem he perceived was somewhat accurate – that to appear old was to be a disadvantage.

Being healthy, intellectually OK, and energetic, is mandatory in this business. It’s not easy. And it’s not always possible for older people. But for me? I decided long ago, that I would be as technically able as anyone else, would know the market well, would do what I could to stay energetic and healthy, and would focus hard on adding value to anyone I encountered. And I told myself when I couldn’t, I’d stop immediately. No putting on a suit and tie, going downtown, sitting in front of a monitor, and playing solitaire for this guy!

So now my mentoring has a bit different slant. We ALL have to establish our worth in the beginning when we enter that room. Me with gray hair and wrinkles, but upright with spring in step. And throwing out indicators, one hopes, that I’m still relevant.

Anyone who’s been in this racket (I’m an industrial broker, 32 years’ worth) has suffered through similar phases, with a few differences in the rhythms depending on when they began. Those who started when times were good (most of us) have had a career something like this:

Phase 1: work like hell and starve for X months; Phase 2: a tenuous, but unsteady foothold; Phase 3: a shot in the chops with an economic downturn, and Phase 4: recovery to solid and steady ground for a long time.

Those who started during a recession had a Phase 1 that was 2X months if they even lasted. But their Phase 3, if they made it, was easier.

It’s human nature to want to enjoy the fruits of one’s labor today, especially in an instant-gratification society. It’s even more of a pull for those who never had much. And, of course, in an industry where youth is revered more than ever due to technology and being up to speed with pop culture, listening to – and heeding – advice from old war horses who have learned from mistakes – is often dismissed. And so, the same mistakes keep occurring with some, generation after generation.

In 2009, in an impromptu gathering of brokers after work one fall day (after the October meltdown), a talented – and cocky – young broker turned to the guy who mentored him, in front of all, and said, “You know, I feel sorry for you!” Caught a little by surprise, the senior guy could only say “Me? Why?” All heads were turned to the junior guy, who then said, “Well, you’ve worked all your life, and now you have half of what you thought you had!”

Actually, it was an astute and pertinent observation, not said with total malice, but definitely designed to be a zinger. The senior guy thought for a minute, then said, “You know, I appreciate you thinking about me, but in all honesty, my life really won’t change much. I have no debt, the kids are all through college, so a hit on paper at this point doesn’t really change that much. But what about you? I know you have three kids who are going to college; I know you just built a new house, I assume, with a big mortgage, and I think you have a couple of new cars that are financed. How will it affect you?”

All heads swiveled back to the junior guy, but the message was fairly clear. There wasn’t much he could say.

A year later, a few of the same people were having lunch together, and the junior guy was agitated. He finally blurted out that he was going to have to get out of the business. He was close to being in trouble.

Fortunately for him – and for his company, as he really was talented and a pretty good guy – things finally rebounded and he got himself back to economic health. He may be a guy that people listen to when we go through the inevitable next downturn.

A less pleasant example of someone affected by his industry downturn was a really talented, older industrial broker in my network. A highly respected guy, locally and nationally, in another city from me. He was a high flier. He made, during good times, more money than most, consistently, but he’d spend it, too. He had a second home; country club memberships; spectacular family trips; even an interest in a plane. And though it was never known for sure, it appeared that he wasn’t investing or putting anything away.

Again, this took place in 2009, which – in all fairness – was the most severe recession since the Great Depression – but still, one that should have been at least partially anticipated. This High Flier was caught, and it was like getting hit by a train. His income went way down. Sadly, he coaxed a signing bonus out of a major competitor, and he left his company, awkwardly. The signing bonus was merely a Band-aid, and soon his problems got worse. The pressures on him were enormous.

I wish there was a better ending to his story. He was a friend. He died suddenly at, by today’s standards, a pretty early age, and there’s no doubt that it was hastened by how he had boxed himself in.

So the lesson learned mostly by people who have gotten very wealthy over time, is this: anticipate a downturn, have a lifestyle that can live at the lower level comfortably, but if you really want to survive a recession – and even profit because of it – have a personal fund ready to take advantage of low equity prices, distressed properties, or even be part of a group buying a distressed enterprise that has great potential (but don’t let your heart get involved – it’s business).

….And be grateful that you can be part of an industry where you can make choices like these! I was shocked at the stories of people who were furloughed in the latest government shutdown who had nothing to fall back on. It’s a tough way to live! Often, it’s not their fault, due to illness, perhaps helping wayward kids, many of life’s obstacles.

Everything you read these days talks about the strength of the industrial real estate market and the low vacancies nationwide.

Well, Cincinnati has even a bigger disrupter. Who else, but Amazon! When the biggest player in the room (can the 800-pound gorilla be eight thousand pounds?) decides to make a move, brace yourself! A short while back, Amazon chose to locate its Prime delivery hub at the Greater Cincinnati Airport in Northern Kentucky, leasing some 900 acres from the airport, and announcing that they would spent $1.5 billion in gearing up, the plan initially being to build three million square feet of air cargo hub.

But they weren't, by any means, finished. Earlier this year, Amazon purchased 210 acres southeast of the airport along Aero Parkway, most of which had been owned by the family of Paul Vester.

Now with 1,100 acres tied up and 10,000 full-time employees, maybe someone might notice what they're doing......(not to mention ramping up to 100 jumbo air freight carriers......)

I've been pretty engaged in the CCIM and SIOR threads nationally on the recent phenomenon of CoStar now being the only real national commercial property player ever since Xceligent went out of business. There are almost as many opinions as there are people, but there is one common theme, and that is, people don't seem to like CoStar and there's a surprising amount of anger directed towards them, resenting the monopoly they have, and often griping about cavalier treatment by CoStar reps and by poor data.

I was a reasonably satisfied Xceligent user for many years, and found the system easy to use and the data accurate enough, though far from perfect. Shortly after they ceased operations, I signed a contract with CoStar, feeling that I couldn't really represent myself properly with prospective clients without a database from which to draw information when needed, whatever it might be. And - I'm an industrial broker, so my perspectives are limited to what I find important. I think it's similar to what office brokers would feel, but much different from the needs of retail brokers and investment brokers. And all are worlds apart from the needs of residential agents.

So: CoStar from my perspective: the local representatives that I've dealt with couldn't have been nicer or more professional. The contract I signed for 2 years was reasonable. The system has a lot of features, many more than Xceligent had. But the property information, from my perspective, isn't quite as complete or as accurate as Xceligent's was. Assigning arbitrary numbers, I'd say Xceligent was about 85% accurate and Costar is about 75%. This could be different market-by-market, though. My guess is that broker-input systems like Catalyst, or cooperative broker efforts such as in Columbus, Minneapolis, Nevada, are about 90 to 95% accurate because the information is put in by the brokers. Xceligent and CoStar relied/rely on employees who are not in the industry canvassing the markets to get property information, and they don't always get it right. May not be their fault - many brokers won't give them the time of day.

NAR has a new system for agents called RPR; Realtor Property Resource. It’s intriguing.

So where does RPR fit today, and where could it fit? The industry is crying for something better. RPR might have the potential to fill the need, but it's not even realistically in the conversation today, and unless something changes, it won't be. It looks like a robust platform from a technology standpoint - but if it relies on local MLS systems to populate the commercial property data, it's as irrelevant as you can get.

I really doubt that any market the size of Cincinnati would successfully integrate commercial property information into the MLS system because commercial firms wouldn't want all the calls from residential agents. This is not to disparage the skills it takes to be a successful residential realtor - the good ones are highly skilled, work very hard, and I'd never buy a residential property without one. But Commercial listing agents get enough time-wasting calls from their own peers who want to show properties, and qualifying people for arranging showings is hard enough, but to have to do that for residential agents would be mind-numbing. So there'd never be buy-in for integrating commercial listings into MLS.

But going back to Columbus, for example, or for the CINDAT model we had in Cincinnati 20 years ago, if you can get all major players to be a part of it, to buy in, so to speak, then you have the basis of a local CIE (Commericial Information Exchange) system that could work, and with RPR, be superior to CoStar. There's a market need for that to happen.

But will it? It isn't easy. In local markets, the large companies like CBRE, and to a lesser extent, JLL, Cushman & Wakefield, Colliers, are reluctant to be in a CIE because they feel that they are providing most of the value, and that the smaller companies or the tenant rep companies benefit at their expense. There's an economic way to handle that, but it's complex.

My feeling is that NAR, SIOR, and CCIM could collaborate, and a national Commercial CIE system could result, that would at worst, be a strong competitor for CoStar, and at best could lead the industry in that commercial agents are already paying to belong to these organizations, so the economic impact on agents could be minimal.

To succeed, pilot programs in cities like Columbus Minneapolis, Las Vegas - just for example - would have to be huge successes for the concept to take off.

If I were younger and in a different place in my working career, I'd love to be a part of it.

Commercial Real Estate is a broad category, though it may seem otherwise.Newer agents cut their teeth on small leases or as a ‘caddy” on larger ones, and often gravitate to the sale of small empty buildings, usually to the entity that will occupy the space. This is especially true of office and industrial buildings, maybe not so much for retail.

A lot of new lingo has developed over the years. Now, those who sell and lease buildings are part of a group called “occupier services.” This is intended to distinguish them from those who sell occupied buildings as investments – currently the hottest product class in the U.S. market.

But one thing they have in common: almost everywhere in the U.S. taxing authorities have very little understanding of values in the market for all commercial buildings, especially not industrial, so the tried-and-true method for determining value is to track public records for the amount of a sale – and bingo! That’s the new value. For those who own and occupy buildings for a long time without transferring ownership, the taxing authority – in Ohio, the County – will usually value the property below market, as to consistently do otherwise is to be challenged in court, and owners and their attorneys usually have far more weapons at their disposal to win tax appeals on their merits. So, to keep values below market is self-serving for the taxing authority, but not so much for those who live in the taxed area.

This being said, there’s a dirty little secret in the sale of net leased property. Tenants are obligated by their leases to pay rent to landlords, and as additional rent, the real estate taxes (and other actual owner costs) costs. If the building hasn’t sold in a long time, the taxes can go way up – to the surprise of the tenant – when the taxing authority sees the amount of the sale in the public record.

But what if the building and land is sold as a part of the sale of the enterprise itself? In other words, when investor X decides to by Widget Manufacturer Y, the real estate is only part of the asset sale. Often, the LLC that owns the real estate remains the same – the LLC itself is part of the sale, but there is no ownership change.

What happens then? Almost always, nothing involving the real estate or its value. And this can easily be justified, as it may very well be that the enterprise has elaborate value-add components within the building, and many times with intrinsic value far in excess of the real estate. In other words, the structure that provides the shade and shelter may have a value that is not important, or even meaningless. To the buyer of the enterprise, it is crucial and very valuable. To a buyer of the building and land for a wholly different use – the property could be worth less than zero.

So why not buy the LLC in every case when you want net leased real estate? There’s really no reason not to, and it certainly will curry favor with your tenant, who, of course, is your willing accomplice, as the existing real estate tax is almost certain to stay lower this way, for reasons listed above.

After a tumultuous political year where uncertainty about American leadership hasn’t stopped the equity markets, industrial real estate seems to be stronger than ever nationally and locally.

For the most part, I serve the Greater Cincinnati/Northern Kentucky industrial real estate market. When I go outside this MSA it’s usually with the help of a local broker, most often an SIOR. But to focus on this local market under a healthy national umbrella, it’s worthwhile to examine where things stand.

I live and work in West Chester, an area 22-26 miles north of the City of Cincinnati and the Ohio River, which is the State Line between Ohio and Kentucky. This Northern Market is one of two that dominates the industrial landscape, the other being northern Kentucky.

Contrary to many preconceived notions about this market being in a stagnant, rust belt area, the Greater Cincinnati industrial scene is lively and active. The two markets referred to are strong and growing.

The Northern Kentucky Market, using the now-defunct Xceligent parameters (which were the best in the market, with peer review by active brokers) consists of about 65 million square feet with under 4% vacancy, most of which is in new spec bulk buildings. This is in an overall Greater Cincinnati Market of about 270 million square feet, so represents a little less than a quarter of the overall market – but it’s arguably the most important.

But let’s confine this, for now, to the Northern Market. Amazon and DHL have controlled the news in Northern Kentucky in an already steaming market. But it’s been well-covered.

The Northern Market, with West Chester as its center, consists of roughly 96 million square feet – or just under 36% of the market. As would be expected, going from south to north in this market segment, the oldest building population is in the south, the newest in the north.

It’s important to note that our industrial market in Cincinnati/Northern Kentucky straddles I-75, the most heavily-traveled highway in America, Automotive Alley, stretching from Canada through Michigan to Florida. And the 2 markets mentioned herein, representing 60% of our overall industrial market, have grown as a result.

But regarding West Chester: when I moved here 40 years ago, it was a sleepy little rural suburb called “Pisgah” with 17,000 residents. By 1990, it had climbed to 40,000sf. Now it’s 61,000.

The biggest driver of commercial real estate growth in West Chester was the opening of a new I-75 interchange just over 20 years ago in late 1997. Since that time, there has been over $3.5 billion invested in commercial property, with over 34 million square feet of new construction, and just in the Union Centre area alone, over 40,000 new jobs created.

Rust belt, indeed. Around the time of the new interchange opening (which today has 50,000 vehicles/day using the interchange) the economy was in full bloom, 2 years from slowing down (and then crashing after 9/11), and there was a flurry of big speculative industrial distribution investment around I-75. On 9/11/2001 there were 5 spec buildings totaling 1.7 million square feet waiting for tenants. They eventually all leased, though it took awhile, then in 2007, just before the next downturn, DCT built two spec buildings almost five miles west of I-75, a marginal location totaling almost 800,000sf. They sold the buildings to Founders/Opus. Later Founders/Opus built 2 more behind the original 2, about the same size, and they filled them as well. Then Clarion, in the third quarter of 2017, bought all four buildings for $102 million, or $64/sf, an unheard-of amount for buildings that far from the interstate.

Nothing illustrates the strength of a market better than that!

And industrial is today’s darling asset class. Office demand is unpredictable, with new workforce needs involving office “hoteling” (i.e. sharing space), people working from home, shifting millennial habits and locations. Retail disruption by e-commerce has been well-documented. Multi-family, booming since the housing crisis, has leveled out. But industrial, with the need for both traditional consumer/business goods growing, is growing even faster with the e-commerce warehouse need. And the stability of large, good-credit distribution centers drives up demand. But absorption of the space seems to keep pace, and there is no supply/demand imbalance threatening the market.

Almost 10 years ago, I used to chuckle at my Stockbroker brother’s stories of how his brokerage business had changed – and how all he and his peers were calling each other “Brokestockers”.

The Internet had knocked them for a loop; “disintermediation” was the buzz word. Just as residential real estate agents, travel agents, and other fee-charging service providers had seen their incomes take a dive due to the explosion of information over the web, even sophisticated stock trades were being discounted and sometimes even performed by “do-it-yourself” investors.

It was only a matter of time, the Ivory Tower guys were saying; the information age was making everything a commodity. Soon everyone would extract the information they needed from the web, bypass the manufacturer’s rep, the real estate agent, the equity trader – service providers couldn’t hoard their information any longer – the matchmaker function was being hijacked by the web.

…And they weren’t totally off base. The travel industry was one of the hardest hit – it was too easy for a traveler to book flights, hotels, rental cars, and even vacation travel packages – themselves. Travel Agencies failed spectacularly. The percentages taken in stock transfers took a nosedive (but the volume of trading increased so radically, also due to technology, that it offset the percentage drop), and many large manufacturing and product-assembling entities began short-circuiting their “rep” networks to go directly to their customers.

Car Dealers felt the sting; now everyone was an expert on “real” car dealer costs (related to MSRP, but loosely) and could buy cars more intelligently. Real Estate was sure to follow, the experts said. All over the country, local Multiple-listing services were putting all of their listings on the web – enabling all who were technically proficient to do on-line shopping, price comparing, and establishing the “right” price before actually talking to an agent.

The commercial brokers didn’t know what to expect. In the late ‘90’s there was such a proliferation of new investment in technology infrastructure, some involving the need for real estate, that Commercial Brokers just rode the wave.

…And then everything hit the wall, beginning with the bursting of the tech bubble, the recession that started in 2000, and the deepening of it after 9/11.

What emerged was a different world, somewhat corrected, but one still dependent on efficiency improvements that were mostly accomplished in developed nations by technology – and labor cost savings accomplished by outsourcing and exporting of our manufacturing to 3d world labor markets.

Commercial Brokers dodged the bullet. Not only was the world changing so rapidly that market expertise was necessary, but technology made brokers far better at performing necessary services.

They needed to be. Corporate America suddenly realized that the worst asset management internally was their real estate investment. Smaller companies were getting stung with suddenly obsolete property. Retail leases that looked like blue chip investments for a generation with regional shopping malls dictating desirable locations were suddenly in the wrong places; suburban office development offering free parking and easy amenities, combined with a lessening need (due to technology) for all functions to be physically located together, and easier commutes – putting America’s “downtown” on notice.

Corporate excesses and meltdowns such as with Enron, WorldCom, Tyco and Adelphia, among others, further complicated the real estate world; suddenly auditors were knocking on doors, and the rush to put corporate America’s real estate house in order made FASB (Financial Accounting Standards Board) a household word – further putting commercial brokers to the task.

When will it stop? Or…will it stop? Within the Commercial Real Estate industry, those who have thrived have been those with good relationships. Is that enough?

Nope. Anyone who has cultivated relationships for years only to see the important contact replaced, fired, part of a company sale, or often, called to task by superiors to “comparison shop” knows too well how fragile the hold on an account can be. No, it takes more than a friendship, more than comfort level.

It takes the skills necessary to make a difference quickly. If a broker/agent can’t do that, he’s an endangered species. Hanging a sign in front of a building and waiting for the phone to ring doesn’t cut it any more. Meeting a management team and spending a half hour telling them how good you are will get you a quick exit. Running a search team around a market without adequate understanding of what they want will make you just another outsider very quickly.

Look around you today. Try to identify the brokers who are passionate about being good at what they do. You’ll run into a lot who aren’t – and who may spend a lot of time bemoaning their bad luck. But when you find a good one, and you know that he or she is good – you’ll be looking at someone who has evolved into an agent who will make his/her clients perform a lot better.